About this Guide
Criticism of nonprofit health systems and questions about their insurance negotiations and consolidation practices have been ongoing narratives in media and policy discussions. The recent report by Third Way, a national think tank advocating modern center-left ideas, claims that hospitals use the threat of dropping patients from their insurance networks as a negotiating tactic to raise prices (Stop Hospitals from Dumping Patients, 6/20/24).
While this article presents a concerning narrative, we do not recommend any direct response to refute these claims in media at this time. Currently, this article has not garnered media attention, and drawing attention would be counterproductive.
At the same time, knowing that members may encounter these messages in the course of ongoing communications with stakeholders, we have compiled this playbook to arm organizations with the broader context to dispel misinformation and correct the record.
Overview and claims from the report
“Stop Hospitals from Dumping Patients”
A report from Third Way
Background The recent report titled “Stop Hospitals from Dumping Patients: Fixing America's Broken Hospitals” (June 20, 2024) from the think tank, Third Way, outlines significant issues within the U.S. hospital system, particularly focusing on the tactics hospitals use to increase prices and the resulting negative impacts on patients and employers. (Note: This report is part of a broader series. Third Way receives funding from Arnold Ventures.)
Key Claims from the Report
Hospitals use hostage-taking strategies: Hospitals are increasingly threatening to leave patients’ insurance networks as a negotiating tactic to raise prices. This strategy, described as “hostagetaking,” endangers patients' access to local hospitals and increases premiums and out-of-pocket costs.
Lack of fair negotiation due to consolidation: Hospital consolidation has led to highly concentrated markets where health plans have little choice but to accept high prices to maintain network adequacy. This limits the ability of health plans and employers to negotiate better prices, contributing to rising healthcare costs.
Consolidation inflates costs: Hospital consolidation leads to higher prices for patients with private insurance, who pay over two and a half times the amount Medicare pays for the same services. This consolidation also allows hospitals to enforce anticompetitive contracting terms, further suppressing competition.
Policy Recommendations
Address hospital consolidation to protect patients: Congress should eliminate unfair pricing advantages resulting from consolidation, including reducing Medicare overpayments for hospitalowned outpatient services, mandating transparent billing practices, and ensuring minimum charity care levels for hospitals benefiting from the 340B Drug Pricing Program.
Prevent future hospital consolidation through stronger antitrust enforcement: Increase resources for federal antitrust agencies to curb hospital mergers and acquisitions effectively. This includes removing restrictions on investigating tax-exempt hospitals and allocating additional funding to the Federal Trade Commission and Department of Justice Antitrust Division.
Ban anticompetitive contracting terms: Prohibit hospitals from using tactics like all-or-nothing contracting, anti-tiering, anti-steering, and most-favored-nation clauses in health plan contracts. Enact federal legislation such as the Healthy Competition for Better Care Act to promote fair competition and affordability in healthcare markets.